EvrClrx311
Full time employment: Posting here.
- Joined
- Feb 8, 2012
- Messages
- 648
It's my understanding that the cap has risen to a point where raising it is becoming a diminishing return (fix) solution... that is, although there are certainly people making tons of money above the current cap, the total potential revenue per citizen approaches a limit on the curve. Less pay off the higher the cap goes... because it affects less and less people and brings in less and less money.
Point is, I think a lot of people have the basic belief that raising the cap limits will fix things more than it actually will.
That is, when SS first came out I believe it was only taxing what would be the first 35,000 or so in today's dollars salary. The cap has slowly risen, consistently over time as a bandaid fix. However, when the cap rose from say $55,0000 to $60,000 it may have brought in an extra 12.4% more from 100,000,000 people's extra $5,000 of income where as raising it from $130,000 to $135,000 down the line would only take in an additional 12.4% of say 2,000,000 people's extra $5,000.
Point being... to produce the same uptick in funds to SS you'd have to impose the tax on 50 times as much income if it affects only 2% more people... then at the next stage it would require an even larger jump because the number of people making higher salaries becomes lower the higher you raise the cap. Eventually you reach a point where it's just not bringing in a significant amount of money anymore.
The system isn't broken (well, that can be debated based on how it's spent) but rather the slosh of people collecting vs paying into it isn't a linear thing because of generational bulges in population. This self corrects over time... but is impacted by so many things... economy, employment rates, immigration, etc...
I'm only 36 so my planning is based on not getting SS, but in reality I'm sure I'll get something... and I wouldn't be surprised if whatever reduction is in place in 15-20 years may return back to today's normal 30-40 years from now... because the tides will reverse and suddenly we may have another boom and a huge influx of funds going in (and a govt looking for ways to spend it)
Point is, I think a lot of people have the basic belief that raising the cap limits will fix things more than it actually will.
That is, when SS first came out I believe it was only taxing what would be the first 35,000 or so in today's dollars salary. The cap has slowly risen, consistently over time as a bandaid fix. However, when the cap rose from say $55,0000 to $60,000 it may have brought in an extra 12.4% more from 100,000,000 people's extra $5,000 of income where as raising it from $130,000 to $135,000 down the line would only take in an additional 12.4% of say 2,000,000 people's extra $5,000.
Point being... to produce the same uptick in funds to SS you'd have to impose the tax on 50 times as much income if it affects only 2% more people... then at the next stage it would require an even larger jump because the number of people making higher salaries becomes lower the higher you raise the cap. Eventually you reach a point where it's just not bringing in a significant amount of money anymore.
The system isn't broken (well, that can be debated based on how it's spent) but rather the slosh of people collecting vs paying into it isn't a linear thing because of generational bulges in population. This self corrects over time... but is impacted by so many things... economy, employment rates, immigration, etc...
I'm only 36 so my planning is based on not getting SS, but in reality I'm sure I'll get something... and I wouldn't be surprised if whatever reduction is in place in 15-20 years may return back to today's normal 30-40 years from now... because the tides will reverse and suddenly we may have another boom and a huge influx of funds going in (and a govt looking for ways to spend it)
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